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EXHIBIT 10.4
THIS AGREEMENT is made as of the ________ day of August, 1997,
BETWEEN:
LEADING-EDGE EARTH PRODUCTS, INC., a company incorporated under
the laws of the State of Oregon, USA and having an office at 000
Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx, XXX, 00000,
(hereinafter referred to as "LEEP")
AND:
XXXXXXXX XXXXXX CORPORATION, a company incorporated under the
laws of British Columbia, Canada and having an office at Suite
1250 - 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
(hereinafter referred to as "HKC")
AND:
GRANT C. RECORD, businessmen, of 000 Xxxx Xxxxx Xxxx. Xxxxx,
Xxxxx 000, Xxxx Xxxxx, Xxxxx, XXX, 00000.
(hereinafter referred to as "Record")
WHEREAS:
A. Record has invented a pre-manufactured composite building panel utilizing the
benefits of shear connectors and other technology aspects (the "Invention") and
has assigned exclusively all United Stated and Canada right, title and interest
in and to the invention to LEEP.
X. XXXX is the owner of a patent in respect of the Technology (the "Patent")
issued by the United States Patent Office under no. 5,440,846 on August 15,
1995.
X. XXXX on April 25, 1997, filed a second patent application (the "Patent
Application") in respect of certain additional technical claims and applications
of the Invention.
D. The Invention, the Patent, the Patent Application and the related technology
are herein collectively referred to as the "Intellectual Property".
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X. XXXX requires financing in the amount of US$5 million (the "Financing") for
the purposes set forth in the financing proposal attached to this Agreement as
Schedule "A" (the "Financing Proposal").
X. XXXX has requested HKC to assist it in raising the Financing and in
particular to identify one or more investors to provide the Financing and to
participate in the joint venture outlined in the Financing Proposal.
G. HKC usually provides the services contemplated by LEEP on the basis of a per
day work fee and a success fee; LEEP has requested HKC be compensated for its
services hereunder by way of a Royalty (hereafter described) on commercial
applications of the Intellectual Property as set forth herein.
H. HKC and LEEP have agreed to enter into this Agreement to set forth their
mutual rights and obligations with respect to the activities to be undertaken by
HKC for LEEP, and as regards the Royalty.
NOW THEREFORE this Agreement witnesses that in consideration of $10.00 and
other good and valuable consideration now paid by HKC to LEEP (the receipt and
sufficiency of which are hereby by LEEP acknowledge) the parties hereto hereby
covenant and agree as follows:
1. Basic Agreement
LEEP hereby appoints HKC on a non-exclusive basis to provide the following
Services to:
1.1 generally, organize the Financing for a period of six months commencing on
the date of execution of this Agreement;
1.2 assist LEEP in preparing an offering document to describe the Financing, the
joint venture company, and all relevant aspects of LEEP's business for
presentation to prospective investors;
1.3 use its best efforts to identify one or more prospective investors who are
willing to complete the Financing on the terms set forth in the Financing
Proposal and/or such other terms as LEEP and any investor may agree upon;
1.4 make initial contact with prospective investors and their professional
advisors and arrange
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for demonstrations of the products which can be manufactured utilizing the
Intellectual Property (the "Products");
1.5 work with prospective investors and such investors' professional advisors
to make recommendations with respect to alternatives which any investor may wish
to pursue but which are not contemplated in the Financing Proposal;
1.6 assist in negotiating and finalizing all the agreements and documents
required in connection with the Financing; and
1.7 expedite and assist in closing the Financing.
2. Acceptance by HKC
HKC hereby agrees to accept the appointment set forth in paragraph 1.1 and
to perform the Services for LEEP on the terms and for the remuneration set
forth in this agreement.
3. LEEP's Obligations
3.1 LEEP will promptly notify HKC of any material change in the business or
affairs of LEEP or of any change in any material facts provided to investors or
any statement or report which might result in a misrepresentation to the
investors.
3.2 LEEP hereby agrees to consider carefully, and if reasonable in the opinion
of LEEP's Board of Directors, to accept HKC recommendations with respect to the
Financing and the details concerning the joint venture company.
3.3 LEEP shall supply such quantities of the Products as are reasonably
necessary in order for HKC to demonstrate the merits of the Invention. At the
request of HKC, LEEP shall provide such information, materials, pamphlets, test
results and other writings as HKC may reasonably require and to cause Record to
attend due diligence and other sessions with prospective investors, as HKC may
reasonably require.
3.4 LEEP shall respond reasonably to the requirements of the Investor with
respect to the structure of the joint venture company;
3.5 LEEP agrees that the following are the essential elements of the Financing
in addition to those set forth in the Financing Proposal:
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a) the joint venture company will own the land, building and any equipment
to be constructed in Twin Falls, Idaho (the "Twin Falls Plant");
b) the Investor may, in the Investor's discretion advance the Financing
partly to LEEP, partly to the joint venture company or wholly to one or
the other provided that LEEP and/or the joint venture company shall in
turn make advances one to the other in order to achieve the use and
allocation of the funds set forth in the Financing Proposal;
c) the joint venture company may be a corporation, partnership, limited
partnership, limited liability company or such other vehicle as may be
required by the Investor for the Investor's tax planning and other
purposes provided that notwithstanding the form of organization, the
Investor shall own 51% of the equity of and LEEP shall own 49% of the
equity of the joint venture company, as herein defined;
d) LEEP shall grant to the joint venture company a non-exclusive license
and right to use all of the Intellectual Property in exchange for which
LEEP shall receive a royalty ("LEEP Royalty") of not less then 5% of
Gross Revenues on sales of all Products produced using the Intellectual
Property whether produced by the joint venture company or any entity
which is granted rights of production by the joint venture company;
4. HKC Royalty
4.1 If HKC identifies the investor that advances the funds to close the
Financing (the "Investor"), LEEP hereby agrees that LEEP shall pay to HKC
one-fifth of the LEEP Royalty (i.e. 1% of the Gross Revenues from sales of
Products by the joint venture company (or any other entity granted it rights of
production by the joint venture company or by LEEP) the ("HKC Royalty") provided
that:
a) for greater certainty, to the extent that LEEP licenses in the
United States and Canada an entity other than joint venture company
to produce Products at a plant or plants other than the Twin Falls
Plant, HKC shall be entitled to receive the HKC Royalty provided
that funds to construct such plants other than the Twin Falls Plant
are provided by the Investor;
b) LEEP agrees that if it shall negotiate a sale, license or other
payment in the United
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States and Canada, wherein payment is received in the form of a
one-time or "bulk payment" as opposed to a royalty based on
production, HKC will be entitled to 20% of any such payment which
shall be payable immediately upon receipt of any such payment by
LEEP.
4.2 If the Investor provides funds to construct the Twin Falls plant but
subsequently chooses not to provide funds to construct other plants, HKC shall
have the non-exclusive right to identify other prospective investors to finance
such other plants. If HKC identifies additional investors acceptable to LEEP
that advance funds to construct other plants, HKC shall be entitled to receive a
royalty on the same basis as the HKC Royalty with respect to such plants.
4.3 LEEP shall cause proper books of account, records and supporting
materials covering all matters relevant to the calculation of the royalty
payable to HKC hereunder and for the reasonable verification thereof. The HKC
Royalty shall be calculated and paid at the end of each calendar quarter in
which revenues are received from the production of Products. The quarterly
calculations, except for the last quarter of the year, shall be submitted to HKC
within 60 days after the last day of the quarter. The calender year end
calculation of the HKC Royalty shall be submitted to HKC within 90 days after
the end of the calendar year. If requested by HKC, the year end calculation of
the HKC Royalty and the records relating thereto shall be audited by
professional accountants designated by HKC (which may be the auditors of LEEP)
and copies thereof shall be delivered to HKC and to LEEP. Either party shall
have 90 days after receipt of any such report to object thereto in writing to
the other party and failing such objectives, such report shall be deemed
correct. If either party shall object to any report and request a review and
reaudit, the professional accountants shall be directed to review and reaudit
the records for the period in question and all costs relating to such review and
reaudit shall be paid by LEEP, if the original audit is found to be in error and
if not, by HKC. LEEP shall at all reasonable times at HKC's sole cost permit
agents of HKC to inspect and audit and make copies of the books of account,
records and supporting materials relevant to the HKC Royalty.
4.4 Payment of the HKC Royalty to HKC shall be made within 60 days after the
end of each calendar quarter based on the calculations set forth in paragraph
4.3. Acceptance by HKC of any HKC Royalty payment shall not prejudice the right
of HKC to protest or question the correctness of the amount of any such payment
as contemplated herein.
4.5 LEEP agrees that no assignment, transfer, license, sub-license or
permitted use of the Intellectual Property shall be permitted or be effective
unless and until the party receiving the benefit thereof agrees to assume and be
responsible for the obligations of LEEP to HKC
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hereunder (including but not limited to payment of the HKC Royalty).
4.6 If any right, power or interest of any party under this Agreement would
violate the rule against or any law relating to perpetuities, such right, power
or interest shall terminate at the earlier of the expiration of 21 years after
the death of the last survivor of all of the lineal descendants of Her Majesty,
Queen Xxxxxxxxx XX of England living on the date of execution of this Agreement,
or such date as otherwise required to render such right, power or interest
effective pursuant to applicable law.
5. Further Relationships
5.1 If requested by HKC, LEEP and Record shall use their best efforts to
cause Xxxxxx X. Xxxxxx, a director of HKC, to be appointed to the Board of
Directors of LEEP.
6. Solemn Covenant
LEEP acknowledges that HKC will not be paid the usual work fee and cash
success fee normally required by it in performing the Services. Rather, HKC has
waved its usual work fee in favour of a success fee in the form of the HKC
Royalty. Accordingly, LEEP solemnly promises and agrees not to take any action,
organize its affairs, sell its assets, merge, amalgamate or otherwise combine
with another entity in order to eliminate, extinguish or diminish in any way
HKC's rights to the HKC Royalty.
7. Out-Of -Pocket Expenses
LEEP shall pay out of pocket expenses incurred by HKC if HKC is
requested by LEEP to travel from Vancouver, Canada to any other point in Canada
or the United States which is in excess of 200 miles from Vancouver, Canada. 8.
Confidentiality
HKC will carry out its obligations in a confidential matter with respect
to any information supplied by LEEP. HKC will require all prospective investors
to execute a confidentiality agreement, in form and content reasonably
acceptable to LEEP, following an initial expression of interest in the Financing
Proposal but in any event prior to HKC furnishing any samples or internal
technical details concerning the Products to prospective investors.
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9. General
9.1 This Agreement shall not be assignable by either party without the prior
written consent of the other and any attempt to assign the rights, duties or
obligations hereunder without such consent shall be of no effect.
9.2 No contractual or other legal right shall be created between the parties
hereto until a fully executed copy of this Agreement has been delivered to each
party.
9.3 The captions appearing in this Agreement have been inserted for
reference and as a matter of convenience and in no way define, limit or
enlarge the scope or meaning of this Agreement or any provision hereof.
9.4 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same document.
9.5 All payments hereunder shall be made in lawful money of the United
States and may be made by bank wire transfer or certified cheque payable at par
at Vancouver, British Columbia.
9.6 The provisions herein contained constitute the entire agreement between
the parties and supersede all previous communications, representations and
agreements whether verbal or written between the parties with respect to the
subject matter hereof.
9.7 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, successors
and permitted assigns.
9.8 Notwithstanding anything herein to the contrary, the parties hereto shall
not be deemed in default with respect to the performance of any of the terms,
covenants and conditions of this Agreement, if the same shall be due to any
strike, lock-out, civil commotion, invasion, rebellion, hostilities, sabotage,
governmental regulations or controls, Acts of God, inability to obtain any
materials, services or financing, or otherwise beyond the control of the
parties.
9.9 Each of the parties hereto hereby covenants and agrees to execute such
further and other documents and instruments and to do such further and other
things as may be necessary to implement and carry out the intent of this
Agreement.
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9.10 This Agreement shall be governed by and construed in accordance with the
laws of the Province of British Columbia which shall be deemed to be the proper
law hereof. The Courts of British Columbia shall have jurisdiction (but not
exclusive jurisdiction) to entertain and determine all disputes and claims,
whether for specific performance, injunction, declaration or otherwise howsoever
both at law and in equity, arising out of or in any way connected with the
construction, breach, or alleged, threatened or anticipated breach of this
Agreement and shall have jurisdiction to hear and determine all questions as to
the validity, existence or enforceability thereof.
9.11 All covenants, conditions and agreements herein contained shall be
construed as being joint and several obligations of executing parties.
9.12 This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto or by their heirs, executors,
administrators, successors and permitted assigns.
9.13 No condoning, excusing or waiver by any party hereto of any default,
breach or non-observance by any other party hereto at any time or times in
respect of any covenant, proviso or condition herein contained shall operate as
a waiver of that party's rights hereunder in respect of any continuing or
subsequent default, breach or non-observance, or so as to defeat or affect in
any way the rights of that party in respect of any such continuing or subsequent
default, breach or non-observance, and no waiver shall be inferred from or
implied by anything done or omitted to be done by the party having those rights.
9.14 All notices, demands and payments required or permitted to be given
hereunder shall be in writing and may be delivered personally, sent by telegram
or facsimile transmission or may be forwarded by first class prepaid registered
mail to the addresses set forth below:
LEADING-EDGE EARTH PRODUCTS, INC.
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX
XXX 00000
XXXXXXXX XXXXXX CORPORATION
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX
0
Xxxxxx X0X 0X0
GRANT C. RECORD
000 Xxxx Xxxxx Xxxx. Xxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx
XXX 00000
Any notice delivered or sent by telegraph or facsimile shall be deemed to have
been given and received at the time of delivery. Any notice mailed as aforesaid
shall be deemed to have been given and received on the expiration of 48 hours
after it is posted, addressed as set forth above, or at such other address or
addresses as may from time to time be notified in writing by the parties hereto
provided that if there shall be between the time of mailing and the actual
receipt of the notice a mail strike, slowdown or other labour dispute which
might affect the delivery of such notice by the mails, then such notice shall
only be effective if actually delivered.
9.15 All references to any party to this Agreement shall be read with such
changes in number and gender as the context hereof or reference to the parties
hereto may require.
9.16 All rights and remedies of either party hereunder are cumulative and are
in addition to, and shall not be deemed to exclude, any other right or remedy
allowed by law. All rights and remedies may be exercised concurrently.
9.17 Should any part of this Agreement be declared or held invalid for any
reason, such invalidity shall not affect the validity of the remainder which
shall continue in force and effect and be construed as if this Agreement had
been executed without the invalid portion and it is hereby declared the
intention of the parties hereto that this Agreement would have been executed
without reference to any portion which may, for any reason, be hereafter
declared or held invalid.
IN WITNESS WHEREOF the parties hereunto set their hands and seals as of
the day and year first above written.
LEADING-EDGE EARTH PRODUCTS, INC.
By:
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XXXXXXXX XXXXXX CORPORATION
By:
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GRANT C. RECORD
By:
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